9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 251 - AT - Insolvency and BankruptcyInitiation of CIRP - Period of limitation - Operational Creditors - date of default in payment of the dues for supply of Isobutanol by the operational creditor to the corporate debtor - period specified under section 10-A of the IBC or not - pre-existing dispute regarding the poor quality of the material supplied to the corporate debtor - dishonouring of the LC discounting by the South Indian Bank - negligence of the corporate debtor. Whether the date of default in payment of the dues for supply of Isobutanol by the operational creditor to the corporate debtor is in the period specified under section 10-A of the IBC? - HELD THAT - The HSS Agreement, which was signed on 15.1.2020 after the creation of LC on 13.1.2020, says that the date of payment would be as given in the invoice. Further, the invoice (attached at pg. 102 of appeal paperbook, Vol.I) clearly states that the credit days are 060-LC collectable in 60 days . It is thus clear that the HSS Agreement, which is the last final contract signed between the parties, clearly specifies that the payment against invoice is to be made by LC which is collectable within 60 days . Hon ble Supreme Court in the matter of M/S BAWA PAULINS PVT. LTD. VERSUS UPS FREIGHT SERVICES (INDIA) PVT. LTD. AND ANOTHER 2022 (11) TMI 1361 - SUPREME COURT , which is cited in support by the Learned Senior counsel for Appellant, held that a letter of credit is independent of and unqualified by the contract of sale or underlying transactions. The autonomy of an irrevocable LOC is entitled to protection and as a rule, courts refrain from interfering with that autonomy. If courts interfere in such transactions, it would be prone to misuse by the applicant party to gain undue advantage leaving the issuing bank at peril in the international financial market. The above judgment places autonomy on an irrevocable LC which is held to be entitled to protection. In the present case, we note that after the opening of LC, a HSS Agreement was entered into between the two parties, which when seen in conjunction with the sales invoice, notes that the payment is to be made through a LC within 60 days from the date of issue of invoice, which is 6.1.2020. This judgment therefore, is distinguishable on the facts of the present case, wherein an explicit HSS Agreement has been signed between the parties since the sale of Isobutanol was on high seas. It is thus clear that the date of default is 60 days from 6.1.2020, which is the date of invoice. Counting 60 days from 6.1.2020, we find that the payment was due to be made by 5.3.2020. Thus, it is clear that the date of default is not covered in the period as stipulated in section 10-A of the IBC, and therefore, section 9 application does not suffer from bar as specified in section 10-A regarding its admission and initiation of CIRP. Whether there was a pre-existing dispute regarding the poor quality of the material supplied to the corporate debtor as defined in law? - HELD THAT - While it is claimed by the Appellant that section 21 notice under the Arbitration and Conciliation Act, 1996 for invoking the arbitration clause under the HSS Agreement was sent through Blue Dart courier, the contents letter dated 10.6.2021 as mentioned above, very clearly show that such a document did not travel in the Blue Dart Express Ltd. network and therefore, no such notice was ever served on the operational creditor. The law propounded by the Hon ble Supreme Court in the matter of Mobilox Innovations Private Ltd. vs. Kirusa Software Private Ltd. 2017 (9) TMI 1270 - SUPREME COURT , that the pre-existing dispute has to be real and genuine one, and not an illusory or hypothetical dispute, is followed - In the present case, the dispute was neither raised before the issue of section 8 demand notice and also the notice under section 21 of the Arbitration and Conciliation Act, 1996 was not proven to be served on the operational creditor. In such a situation, the corporate debtor cannot claim pre-existence of dispute in the adjudication of the section 9 application. Whether the dishonouring of the LC discounting by the South Indian Bank was on account of negligence of the corporate debtor? - HELD THAT - The operational debt should have been paid through LC facility within 60 days from 15.1.2020, and since it could not done due to discrepancies in submission of documents to the South Indian Bank, it was the responsibility of the corporate debtor to make the payments, more so when it was being repeatedly asked to do so by the operational creditor - HSS Agreement was executed on 15.1.2020 and under the General Conditions of Sale included in the HSS Agreement, the payment was to be made with 60 days from the date of bill of lading, which would be date of default and which would not be covered in the period stipulated in Section 10-A of the IBC. The Impugned Order does not suffer from any infirmity and it does not require any interference - Appeal dismissed.
Issues Involved:
1. Date of Default and Section 10-A of IBC. 2. Pre-existing Dispute regarding Quality of Goods. 3. Dishonoring of LC Discounting by South Indian Bank. Summary: Issue 1: Date of Default and Section 10-A of IBC The Tribunal examined whether the 'date of default' in payment fell within the period specified under Section 10-A of the IBC, which suspends the initiation of CIRP. The purchase order dated 8.1.2020 stipulated payment terms as 'LC 60 days from the HSS date'. Despite the LC document created on 13.1.2020 mentioning a 90-day period, the HSS Agreement signed on 15.1.2020 and the sales invoice clearly specified payment through LC within 60 days. Therefore, the payment was due by 5.3.2020, and the date of default was not covered under Section 10-A, allowing the Section 9 application to proceed. Issue 2: Pre-existing Dispute regarding Quality of Goods The Tribunal assessed whether a pre-existing dispute regarding the quality of goods existed. The corporate debtor claimed issues with the quality of Isobutanol and invoked arbitration. However, no substantial evidence of a pre-existing dispute was provided. The Tribunal noted that the section 21 notice under the Arbitration and Conciliation Act, 1996, claimed to be sent via Blue Dart courier, did not travel in the Blue Dart network, as confirmed by Blue Dart Express Ltd. Hence, the Tribunal concluded that the dispute was not genuine or real, dismissing the claim of a pre-existing dispute. Issue 3: Dishonoring of LC Discounting by South Indian Bank The Tribunal examined the reasons behind the dishonoring of the LC discounting. It was found that the corporate debtor submitted the documents for LC discounting to South Indian Bank, which pointed out discrepancies. The responsibility to cure these discrepancies lay with the corporate debtor. Despite repeated requests from the operational creditor for payment, the corporate debtor failed to make the payment. The Tribunal held that the corporate debtor was responsible for the non-payment due to discrepancies in document submission, affirming the default after 60 days from the date of the bill of lading. Conclusion: The Tribunal found no infirmity in the Impugned Order and dismissed the appeal, upholding the initiation of CIRP against the corporate debtor. The appeal was dismissed with no order as to costs.
|
